COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS The 2026 Annual Single Market and Competitiveness Report
Date: 2026-01-30
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: EU industrial policy, circular economy, competitiveness, digital transformation, economic growth, green economy, innovation, investment, single market, twin transition

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 30.1.2026  COM(2026) 46 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS The 2026 Annual Single Market and Competitiveness Report {SWD(2026) 30 final}  
 
 
Introduction  

Europe’s  competitiveness  faces  unprecedented  challenges  in  a  volatile  geopolitical 
situation. EU industry is coming under mounting pressure as third country overcapacities are 
directed  towards  the  EU,  important  international  currencies  depreciate  and  rules-based 
international  trade  is  challenged.  The  systemic  and  strategic  application  of  increased  tariffs, 
export controls and weaponisation of dependencies by major global actors highlight the need to 
strengthen the resilience of EU’s supply chains.   

The Single Market is our best asset to counter external pressure, and it is time to build on 
its strengths. It acts as a home market for our companies, as a springboard to scale and as a basis 
to  advance  the  European  interest.  It  provides  a  stable  business  environment,  with  strong 
institutions and a full commitment to the rule of law. However, significant barriers remain within 
the  Single  Market,  notably  at  national  level.  As a  result  of  the  external  pressure  and  internal 
barriers, Europe’s industrial base is eroding, leading to a loss of manufacturing jobs and factory 
closures. There is an urgency to act effectively at both national and EU levels.  

This Annual Single Market and Competitiveness Report takes stock of the functioning of 
the Single Market and of EU competitiveness. The focus is on the main drivers for Europe’s 
competitiveness along four pillars, with particular emphasis on the Single Market and tracking 
progress  in  the  implementation  of  the  Single  Market  Strategy.  This  Report  assesses 
competitiveness bottlenecks and progress in addressing them making use of 29 Key Performance 
Indicators (KPIs). This Report also includes the first annual Single Market Enforcement Agenda 
which sets out measures to forcefully address national barriers. 

Since the start of this mandate, the Commission has put competitiveness at the core of its 
action. The Competitiveness Compass, presented in January 2025, was the first major initiative 
of  this  Commission  mandate  setting  a  path  for  Europe  to  regain  competitiveness  and  secure 
sustainable  prosperity.  While  this  has  sent  a  clear  signal,  these  competitiveness  enhancing 
measures need time to show tangible outcomes. This is also reflected in the Report's analysis and 
its KPIs which measure annual evolutions. Out of 29 KPIs, 6 show a clear improvement, 6 show 
a clear deterioration compared to last year, 15 remain broadly unchanged and for 2 there is not 
yet  a  second  observation  to  assess  the  trend.  Integration  in  the  Single  Market  has  reached  a 
plateau (KPI 2) and most barrier-relevant KPIs show limited progress. At the same time, EU 
efforts to reduce administrative burdens on companies and administrations are starting to bear 
fruit (KPI 3). Expenditure in Research and Development remains below the 3% of GDP target 
(KPI 12) and is too low to close the innovation gap. Private investment has fallen (KPI 18), while 
Venture Capital investment remains below peers (KPI 20). The renewable build-out continues 
(KPI 24 and 25) and starts decreasing prices in some areas, although the overall level of energy 
prices remains high  (KPI 22). The EU maintains a strong position in international trade amid 
fierce global competition (KPI 27), but strategic dependencies remain elevated (KPI 29).  

Several supporting documents underpin this Report. Annex 1 provides an overview of the 
long-term trends of the KPIs underpinning the analysis. Annex 2 updates on progress with the 
implementation  of  policy  actions  under  the  Commission  Competitiveness  Compass,  Clean 
Industrial Deal and Single Market Strategy. To put European competitiveness in the international 
context,  Annex  3  gives  an  overview  of  resilience  measures  by  selected  global  players.  In 

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addition, the 2026 edition of the online Single Market and Competitiveness Scoreboard assesses 
the performance of different Single Market policy areas and monitors the countries’ performance 
in  implementing  the  four  freedoms.  The  annual  report  of  the  Single  Market  Enforcement 
Taskforce  (SMET)  is  also  published  in  conjunction  with  this  Report.  SMET  identified  and 
developed strategies to tackle the 'Terrible Ten' barriers outlined in the Single Market Strategy, 
breaking them down into specific challenges and organising efforts to address them effectively.   

SECTION 1 – A functioning Single Market 

Persistent  barriers  at  the  national  and  European  level  hold  back  the  Single  Market, 
forgoing  economic  potential.  Labour  productivity,  measured  as  GDP  per  hour  worked  in 
purchasing  power  adjusted  terms,  is  one  of  the  highest  in  the  world,  reflecting  European 
competitiveness  and  prosperity.  Still,  there  is  a  gap  of  around  20%  compared  with  the  US 
(KPI 1),  mainly  due  to  Europe  lagging  behind  in  the  production  and  adoption  of  digital 
technologies1. Recent trends risk widening this gap. The Single Market has raised EU GDP by 
3-4% annually2 and created more than 3.5 million jobs. Further integration has reached a plateau 
(KPI 2), with trade in goods inside the Single Market broadly stable over the recent years and 
falling in 2024 compared to 20233, with trade in services still increasing but at a slow pace.  

KPI  
KPI 1: Labour 
productivity   
KPI 2: Integration in the 
Single Market    

What it measures  
GDP per hour worked in Purchasing Power Parity 
(PPP) terms. 
Share of EU GDP represented by trade between 
EU Member States. 

Latest EU values  
At 78.5% of US levels (2024)   
At 78.0% of US levels (2023)    
22.0% for goods (2024)   
23.5% for goods (2023) 

KPI 3: Simplification of 
EU rules 

Projected annual administrative savings from 
Commission’s adopted omnibus simplification 
proposals and other initiatives.  

KPI 5: Ease of regulatory 
compliance 

KPI 4: Conformity deficit    Share of transposed EU Single Market Directives 
for which infringement proceedings for incorrect 
transposition were launched. Target <= 0.5%. 
Replies to the survey question: ‘… how easy is it 
for companies to comply with government 
regulation and administrative requirements4?’ 
Positive recognition rates as % (EU average) of all 
received requests. 
Average length (in years) of the drafting stage of 
standards. 
Share of material recovered and fed back into the 
economy. Target = 24% in 2030. 
Median number of product investigations per 
million inhabitants in EU Member States5. 
Restrictiveness of regulation in selected service 
sectors6.  

KPI 6: Recognition of 
professional qualifications 
KPI 7: Length of standard-
setting procedures 
KPI 8: Circular material 
use rate 
KPI 9: Product compliance 
monitoring 
KPI 10: Services trade 
restrictiveness  

7.9% for services (2024) 
7.7% for services (2023)   
EUR 15 bn (2025) 

1.1% (2025)  
0.9% (2024)  

3.89 out of 7 (2025) 
3.66 out of 7 (2024) 

82.2% (2023) 
77.3% (2022) 
4.0 (2024) 
3.2 (2023) 
12.2% (2024) 
12.1% (2023) 
102 (2024) 
82 (2023)  
4.2% (2024) 
4.2% (2023) 

1 Draghi report: The Draghi report on EU competitiveness. 
2 Lionel Fontagné, Yoto V. Yotov, Reassessing the Impact of the Single Market and Its Ability to Help Build Strategic Autonomy, Single 
Market Economics Papers, June 2024. Studies like J. in ‘t Veld, Quantifying the Economic Effects of the Single Market in a Structural 
Macromodel, February 2019, estimate much higher effects. 
3 Fluctuations in the past years can to a large part be attributed to energy price fluctuations. 
4 Index values from 1 to 7, with higher values indicating greater ease of doing business. 
5 Measuring product investigations carried out by market surveillance authorities which are notified in ICSMS. 
6 OECD’s STRI showing the share of catalogued restrictions to trade in services being present in selected sectors. 

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KPI 11: Digitalisation of 
Single Market procedures 

Share of Single Market relevant administrative 
procedures fully online for cross-border users. 

20.6% (2024) 

Legend for 
KPI tables: 

Improvement  
year-on-year 

Stable 

Worsening  
year-on-year 

Single observation 

Removing  the  most  harmful  Single  Market  barriers  is  key  to  unlocking  further  growth 
across the EU. Although there is considerable variation between studies7 estimating the size of 
Single Market barriers, the evidence consistently shows that they remain highly detrimental to 
economic outcomes. Further removal of national barriers impeding cross-border trade in goods 
could result in welfare gains of approximately 1.3%8. The Single Market Strategy9 identified the 
Terrible Ten as the most pressing barriers10, requiring action at both EU and national level (see 
Box 1). Accordingly, of the 11 KPIs measuring Single Market–related aspects in this Report, 
eight pertain to the Terrible Ten barriers, while burdensome procedures for posting of workers 
and territorial supply constraints are not covered. This section therefore discusses progress on 
the Terrible Ten and then addresses digitalisation and SMEs in the Single Market. 

BOX 1: THE ROAD TO REMOVE THE TERRIBLE TEN BARRIERS AT THE NATIONAL LEVEL 

The  Single  Market  Strategy  has  identified  the  most  harmful  barriers  affecting  the  Single 
Market, the so-called Terrible Ten. The Commission has conducted an analysis to break down 
the Terrible Ten into a more detailed list of priority problems and has started to discuss with 
Member States how these problems materialise at the national level. The aim of this exercise 
is to reach a mutually agreed state of play regarding how Member States perform on each of 
these issues. The overview will provide a basis for action to remove the identified barriers at 
the  national  level.  The  process  of  working  on  barriers  has  been  endorsed  by  the 
Competitiveness Council and its concrete implementation will be launched in 2026. 

Fragmented national rules continue to make it complex and costly to establish and operate 
companies  across  the  EU,  with  no  progress  to  date.  The  perception  of  ease  of  regulatory 
compliance  has  been  broadly  stable  in  the  EU  over  past  years  (KPI  5),  showing  also  that 
establishing a permanent presence in another Member States remains cumbersome, in particular 
as companies need to assess and comply with the national company law in each Member State.  

Performance of EU market surveillance is still insufficient. This is illustrated by the fact that 
while the number of investigations is slowly increasing, national authorities notify that only 102 
parcels are checked per one million inhabitants (KPI 9). In parallel, the exponential surge of e-
commerce imports, reaching 4.6 bn small value consignments in 2024, puts pressure on customs 
and  market  surveillance  authorities,  posing  a  major  challenge  for  checking  compliance  and 
safety, amplified by uneven national control performance and inefficient cooperation between 
authorities11.  This  results  in  an  uneven  playing  field  for  rules-abiding  EU  businesses.  More 
generally, the EU product legislation framework regulating harmonised products, known as the 

7 IMF ‘Scaling Up the Single Market to Boost Productivity’ (2024), or Head and Mayer ‘No, the EU does not impose a 45% tariff on itself’ 
(2025). 
8 Roberto Bernasconi, Naïm Cordemans, Vanessa Gunnella, Giacomo Pongetti, Lucia Quaglietti, What is the untapped potential of the EU 
Single Market?, published as part of the ECB Economic Bulletin, Issue 8/2025.  
9 COM(2025) 500. 
10 These are: complicated business establishment and operations, outdated harmonised product rules and lack of product compliance, territorial 
supply constraints, long delays in standard-setting that weigh on innovation and competitiveness, fragmented rules on packaging, labelling and 
waste,  restrictive  and  diverging  national  services  regulation,  burdensome  procedures  for  posting  of  workers,  recognition  of  professional 
qualifications, lack of Single Market ownership by Member States, and overly complex EU rules. 
11 DG GROW-DG TAXUD report on Product Compliance, highlighting uneven level of controls at the border 
Report on controls on products entering the EU market with regard to product compliance in 2024 - Publications Office of the EU. 

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New Legislative Framework (NLF)12, is a major asset of the Single Market, but there is a lack 
of controls and a need for improvement in addressing market developments, digitalisation, and 
circularity.  

The Single Market for goods is further impeded by territorial supply constraints. They are 
imposed by some manufacturers of branded consumer goods and hinder retailers and wholesalers 
from buying products in one Member State and reselling them in another, harming cross-border 
business to the detriment of consumers. 

Over the past decade, the average time needed to establish a new industrial standard has 
increased.  Currently  at  four  years  (KPI  7),  this  slowness  is  partly  due  to  outdated  working 
methods  and  the  under-utilisation  of  digital  technologies.  As  a  result,  standardisation  fails  to 
meet  market  and  legislative  needs,  particularly  for  new  technologies,  weighing  on  the 
competitiveness of EU industry.  

In  the  area  of  packaging,  labelling  and  waste,  the  Single  Market  remains  fragmented, 
contributing to slow progress towards circularity. National labelling requirements, including 
those  linked  to  waste  sorting,  require  companies  to  relabel  products  or  adapt  digital  content, 
splitting up the Single Market.  Fragmentation of the Single Market for waste runs counter to 
circularity, with the circular material reuse rate increasing very slowly to 12%, well below the 
target of 24% set for 2030 (KPI 8). 

Regulation  of  services  markets  is  still  complex  and  inconsistent,  with  little  progress  in 
recent years. The regulation of services can be justified by legitimate general interest objectives, 
but in practice there is a high level of diversity of restrictions and some services are regulated 
only in one or a few Member States, which shows that there is significant potential to reduce 
regulatory burden. Despite efforts to remove restrictions, the level of restrictiveness in services 
has remained stable in recent years (KPI 10) and deserves a new political impetus. 

The temporary posting of workers is an integral part of the freedom to provide services 
but  is  still  too  cumbersome  for  companies.  EU  law  allows  Member  States  to  impose 
administrative  obligations  to  declare  posted  workers,  where  justified  and  proportionate.  This 
reflects the need to ensure a level playing field and protect the rights of workers, in particular in 
risk  sectors  such  as  construction  and  agriculture.  However,  declaration  procedures  are  often 
complex, while not all situations of posted workers (e.g. skilled specialists) pose the same risks. 
Reinforced efforts by Member States are needed to implement the best practices identified in the 
Single  Market  Enforcement  Taskforce,  which  mostly  fall  within  Member  States’  regulatory 
discretion, to reduce administrative barriers in this area13. Commission services, together with 
the European Labour Authority (ELA), are working to develop a KPI for next year’s edition of 
this Report related to the posting of workers. 

Lengthy and cumbersome procedures for the recognition of skills and qualifications can 
prevent  EU  citizens  from  exercising  their  profession  in  other  Member  States.  Overly 
stringent regulation and cumbersome recognition procedures create barriers to entry and reduce 
labour market mobility, thereby contributing to skills mismatches and labour shortages at both 
national and EU level. Despite an improvement in 2023, the rate of positive recognition decisions 

12 New legislative framework - Internal Market, Industry, Entrepreneurship and SMEs. 
13 The annual report of the Single Market Enforcement Taskforce (SMET) provides a detailed update. 

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remained broadly unchanged over the past five years (KPI 6). Further, recognition procedures 
are still often paper based and could be significantly sped up by full digitalisation. 

The Commission is  stepping up efforts to address  the conformity deficit, measuring  the 
share  of  incorrectly  transposed  Single  Market  directives,  which  remains  too  high.  It  is 
crucial that Member States assume full ownership of the Single Market. The conformity deficit 
has increased to 1.1% in 2025, remaining much above the target of 0.5% (KPI 4), with wide 
variation  among  Member  States.  Regulatory  fragmentation  comes  at  an  important  cost  to 
businesses and households. A strong compliance culture is needed across the Single Market and 
is  key  to  ensuring  that  preventive  instruments,  in  particular  the  Single  Market  Transparency 
Directive, the Services Directive and the Proportionality  Test  Directive, can  deliver their full 
effect. There is no point in removing barriers if we constantly create new ones. To drive effective 
legal action where barriers persist, the Commission sets out for the first time an Annual Single 
Market  Enforcement  Agenda  (see  Box  2).  While  Single  Market  barriers  largely  stem  from 
regulatory  and  administrative  requirements  set  at  national  level,  differences  in  their  practical 
application and enforcement by national, regional and local authorities can affect how businesses 
benefit from market integration, contributing to uneven outcomes in the functioning of the Single 
Market. 

BOX 2: THE ANNUAL SINGLE MARKET ENFORCEMENT AGENDA 2026 

The Commission pursues appropriate legal action as the cornerstone of enforcement of the 
Single  Market  rules.  Based  on  the  Terrible  Ten  barriers,  the  first Annual  Single  Market 
Enforcement  Agenda  therefore  identifies  the  following  priority  areas  for  horizontal 
investigations and specific enforcement actions:  

•  Late payments in transactions between undertakings and public authorities.  

•  Obstacles in construction and installation services related to the green transition. 

These investigations and enforcement actions, where necessary, will cover potentially most 
or all Member States and will include open dialogue and, where necessary to remove clearly 
identified barriers, infringement proceedings. The enforcement priorities will not be  set to 
the detriment of the treatment of other existing or future obstacles to the free movement of 
goods  and  services. To  enhance  transparency  on  enforcement,  when  specific  enforcement 
actions  are  decided,  clear  explanations  regarding  the  objectives  pursued,  the  expected 
benefits as well as the results achieved will be published. 

Significant  progress  has  already  been  made  to  reduce  administrative  burdens.  These 
burdens  weigh  on  businesses  and  administrations  and  are  estimated  at  EUR  150  bn  per  year 
across the EU, with the target to reduce these by at least 25%, and by at least 35% for SMEs, by 
the end of this mandate. The Commission has already proposed ten omnibus packages as well as 
other initiatives14 which, at the time of their adoption by the Commission, are projected to reduce 
the recurrent administrative annual burdens by around EUR 15 bn, of which EUR 11.9 bn from 
omnibus proposals and EUR 3.1 bn from other initiatives adopted in 2025 (KPI 3)15. Moreover, 
new  initiatives,  such  as  European  Business  Wallet  Regulation  has  a  potential  to  contribute 

14 Other initiatives (14) are those resulting in administrative cost savings for businesses and public administrations at the time of their adoption 
by the Commission. They cover targeted revisions of existing EU acquis (e.g SFDR Review or Targeted revision of the EU rules for medical 
devices and in-vitro diagnostics). 
15 These savings were estimated using the EU standard cost model.  

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to 

the  overall  administrative  cost  reduction  for  businesses  and  public 
significantly 
administrations,  with  minimum  EUR  13.5  bn.  The  Commission  is  carefully  assessing  and 
bringing  forward additional means to  reduce  administrative burdens. Public procurement  is  a 
case  in  point:  the  current  framework  is  fragmented  with  numerous  sectoral  acts  creating 
uncertainty and inconsistency in interpretation and application. Simplifying these rules would 
greatly help over 44 000 public authorities in the EU purchasing services, works and supplies, 
as well as companies bidding for these tenders, worth around 15% of GDP (≈ EUR 2.5 trillion).  

The roll-out of digital tools and interoperable public services is still at an early stage and 
holds  potential  to  reduce  administrative  time  and  compliance  costs  while  strengthening 
legal certainty for businesses and citizens. The Single Digital Gateway (SDG) Regulation16 – 
expanded across an increasingly wide set of policy areas – establishes Your Europe as the EU’s 
main  e-government  entry  point,  giving  citizens  and  business  access  to  reliable,  multilingual 
information on rights, obligations and administrative procedures in all Member States, as well 
as links to national portals and key online procedures. Yet, SDG implementation remains at an 
early stage and uneven across Member States and policy areas, with only 21% of key procedures 
fully online in 2024 (KPI 11). The EU business wallet, which was proposed at the end of 2025, 
will  allow  companies  to  securely  identify  and  exchange  data  with  governments  and  other 
businesses across the EU with full legal effect and trust. 

The  EU  Single  Market  increases  opportunities  for  SMEs  to  grow,  despite  persisting 
barriers. In 2024, a quarter of EU SMEs exported goods or services to other EU countries while 
about one in ten exported to countries outside the EU17. The main barriers for SMEs include 
regulatory obstacles and administrative burden, followed by challenges related to financing and 
skills.  In  addition,  73%  of  SMEs  report  suffering  from  late  payments,  which  hampers  their 
growth and investment potential and threatens their survival.  

SECTION 2 – Closing the innovation gap 
Europe  risks  losing  its  edge  in  the  race  for  innovation.  Despite  boasting  world-leading 
universities, growing employment rates and a highly qualified workforce, R&D expenditure and 
patenting  rates  in  the  EU  remain  flat.  Start-ups  and  scale-ups  struggle  to  grow,  while 
digitalisation is progressing more slowly than in competing economies. Labour shortages and 
skills gaps in areas such as IT and clean tech hamper innovation.  

KPI 12: R&D expenditure     Total private and public expenditure in 
research and development as a share of 
GDP. Target = Above 3% by 2030.    

2.24% (2024)  
2.26% (2023) 

KPI 14: Digital technologies 
adoption by companies      

KPI 13: Patent applications       Patent applications per million inhabitants18.  152 (2024) 
153 (2023)   
Artificial intelligence:   
20% (2025), 13.5% (2024) 
Data analytics:  
39.9% (2025), 33.2% (2023) 
Cloud computing services:  
46.7% (2025), 38.9% (2023)  
75.8% (2024) 
75.3% (2023) 

Share of European enterprises that have taken 
up cloud computing services, data analytics 
and/or Artificial Intelligence. Target = 75% 
by 2030. 

The share of working-age people employed.  
Target = 78% by 2030. 

KPI 15: Employment rate 

16 Regulation - 2018/1724 - EN - EUR-Lex. 
17 Flash Eurobarometer 559 – Startups, scaleups and entrepreneurship. 
18 Patent applications submitted to the European Patent Office. 

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KPI 16: Labour shortages 
relevant for the green transition 

KPI 17: PISA score        

Number of occupations requiring specific 
skills for the green transition where at least 
five Member States reported a shortage. 
15-year-olds’ performance in the OECD’s 
PISA tests. High scores indicate better 
performance. 

25 (2024) 
13 (2023) 

Maths: 474 (2022), 492 (2018) 
Reading: 475 (2022), 488 (2018) 
Science: 484 (2022), 488 (2018)  

Notwithstanding the strong foundations of the EU research landscape, R&D investment in 
the EU still falls short of the 3% of GDP target. Total R&D investment in the EU reached 2.2 
%  of  GDP  in  2024,  showing  little  progress  over  the  ten  years  and  remaining  below  peers 
(KPI 12). Despite high public R&D investment in the EU, private sector R&D investment trails 
peers, notably in overall corporate R&D19 and in digital technology. Innovation outcomes, such 
as  Intellectual  Property  and  patenting  activity,  which  are  crucial  to  commercial  success  and 
competitiveness, have also remained broadly flat in recent years (KPI 13). A closer look across 
the technology spectrum shows that the EU is a frontrunner in green inventions20, and performs 
well  in  health,  biotech  and  pharmaceuticals21,  while  it  continues  to  score  low  in  the  area  of 
digital22.  

Even in areas where R&D investments are being made and results achieved, starting and 
scaling up innovative companies remain challenging. Innovative companies are hampered in 
their efforts to commercialise research and face regulatory fragmentation, heavy administrative 
burdens, and difficulties in access to finance, particularly venture capital. Even though Europe's 
tech sector grew by more than 15 000 new startups per year from 2018 to 2023, it produced only 
one fifth as many new unicorns as in the US23. Moreover, the EU’s market share in development 
of digital technologies remain modest, as a result, the EU continues to rely heavily on external 
providers of notably digital technologies. Fostering the transition from laboratory to market is 
crucial in this context, as through the Biotech Act24.   

The adoption of digital technologies is increasing, but too slowly25. The share of companies 
in the EU using artificial intelligence, cloud computing and data analytics grew significantly in 
2025, yet more slowly than in competing economies and far from being on track to meet the 
target of a 75% uptake by 2030 (KPI 14). The lagging uptake of digital technologies is most 
striking  among  SMEs26.  Similarly,  there  is  market  fragmentation  in  EU  telecommunications 
further hampering deployment27. As a result of these issues, substantial productivity gains remain 
unrealised. It is estimated that achieving the EU’s digitalisation targets would unlock economic 
gains equivalent to 1.8% of GDP 28. 

Employment rates are on the rise, but employment in manufacturing is shrinking. The EU 
employment rate reached a record high of 75.8% in 202429 (KPI 15) and is on track to meet the 
EU’s headline target of 78% in 2030, but a significant gender gap remains. This performance is 
mostly in line with the US, but below trends in Japan and the UK30. However, the weakening 

19 The 2025 EU Industrial R&D Investment Scoreboard. 
20 EU companies lead globally in patenting related to circularity, energy- intensive industries and clean transport, but less so in twin transition 
patenting.  
21 EIB Investment Report 2024/2025: Innovation, integration and simplification in Europe, European Investment Bank 2025, and ‘The 2025 
EU Industrial R&D Investment Scoreboard’. 
22 With exception of areas such as Quantum and Photonics.  
23 Start-up companies valued at EUR 1 bn. European Commission services calculations based on Dealroom. 
24 Commission proposes new measures to improve health and the healthcare sector - European Commission. 
25 Eurostat. 
26 EU Digital Intensity Index composition overview 2015-2024. 
27 White Paper – How to master Europe’s digital infrastructure needs? COM(2024) 81 final. 
28 State of the Digital Decade 2025: Keep building the EU's sovereignty and digital future. COM(2025) 290 final. 
29 Eurostat. 
30 OECD, Labour force participation rate. 

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competitiveness  of the  EU’s  manufacturing industry led to  an  average monthly  loss of about 
27 000 manufacturing jobs over the past two years31. 

Labour  shortages  and  skills  gaps  remain  a  challenge,  weighing  on  Europe’s  ability  to 
innovate and scale up. Nearly 80% of companies refer to them as the second biggest obstacle 
to investment and growth32. Many of the new jobs emerging from the green transition will be in 
sectors  already  experiencing  increasing  labour  shortages33  (KPI  16).  Digital  skills  remain  a 
challenge as well, with just 60 % of Europeans having basic digital skills34 and the availability 
of ICT specialists with advanced skills remaining low35. Europe is also facing difficulties in the 
area of basic skills36 (KPI 17). Challenges  relating to  the recognition  of qualifications across 
countries and language barriers hinder intra-EU labour mobility. Fostering skills development, 
including  through  vocational  training,  and  attracting  global  talent  are  essential  to  addressing 
labour shortages.  

SECTION 3 – Decarbonisation of industry and investment 

Investment  momentum  in  the  EU  is  weak,  reflecting  both  general  uncertainty  over  the 
economic environment and  a decline in  competitiveness.  Private investment  and industrial 
production declined in 2024, although public investment is stable and provides an opportunity 
to unlock private sector activity through well-aligned policy design. High energy prices hinder 
industrial  competitiveness.  Electrification  does  not  progress.  The  switch  to  clean  energy  is 
accelerating but not yet feeding through to lower electricity prices in the EU as a whole.  

KPI 18: Private investment   

Private investment (share of GDP).   

KPI 19: Public investment   

Public investment (share of GDP).   

KPI 20: Venture capital 
investment      
KPI 21: EU investments 
supporting industrial transition 
KPI 22: Electricity prices for 
non-household consumers  
KPI 23: Electrification   

KPI 24: Share of energy from 
renewable sources     
KPI 25: Annual growth in 
renewable electricity generation 

Venture capital investment (share of GDP).   

Cumulative volume of InvestEU investments 
supporting industrial transition.  
Electricity prices for non-household consumers 
(EU ID price band, large commercial users)37. 
Electricity as a share of the total (final) energy 
consumption.  Objective = 32% in 203038. 
Renewable energy generation as share of energy 
consumption. Target = 42.5% in 2030. 
Annually added capacity to generate renewable 
electricity. Objective = +100 GW per year39. 

17.6% (2024) 
18.6% (2023) 
3.7% (2024) 
3.6% (2023)     
0.06% (2024) 
0.06% (2023)     
EUR 115.5 bn (Jun 2025) 
EUR 52.7 bn (Jun 2024) 
EUR 0.164 per kWh (2025)    
EUR 0.163 per kWh (2024) 
22.9% (2023) 
22.9% of (2022) 
25.2% (2024) 
24.5% (2023)  
+68 GW (2024) 
+67 GW (2023) 

EU private investment declined in 2024, among headwinds for industry. As a result, private 
investment as a share of GDP dropped to 17.6% of GDP in 2024 and stood on par with US levels, 

31 European Commission based on Eurostat annual national accounts and Short-Term Statistics data and other sources. 
32 EIB Investment Survey (EIBIS). 
33  Recent  analysis  identified  24  occupations  relevant  to  the  green  transition  with  labour  shortages  across  multiple  Member  States.  Such 
occupations include plumbers and pipe fitters (20 Member States), insulation workers, civil engineers and air conditioning and refrigeration 
mechanics (14), civil engineering technicians (12) and roofers (11). They require technical and manual expertise essential to the green transition. 
See also EURES Reports on Labour Shortages and Surpluses (2024 and 2025 editions. 
34 Eurostat, based on EU survey on the use of ICT in households and by individuals. 
35 Eurostat. 
36 OECD PISA database. 
37 Electricity prices here exclude levies and taxes that companies can recover. 
38 This objective was set by the Commission in its “Clean industrial Deal” Communication.  
39 This objective was set by the Commission in its “Clean industrial Deal” Communication. 

8 

 
 
 
after being broadly stable and higher than in US in recent years (KPI 18)40. Industrial production 
in the EU declined by 1.5% in 2023 and a further 2.4% in 2024. The financing of EU business 
investment  is  still  too  reliant  on  bank  lending  (accounting  for  more  than  51%  of  business 
investment in 2024). Venture capital investment in the EU is only equivalent to 0.06% of GDP 
(KPI 20), one-tenth of US levels. Currently only 44% of EU households’ financial savings are 
invested in company bonds, listed shares, investment funds and similar, which is much lower 
than in other jurisdictions41, despite a higher volume of savings in the EU42. Increasing the share 
of  EU  households’  savings  flowing  towards  productive  investments  in  companies  would 
strengthen capital markets and corporate financing structures43. With this aim and to strengthen 
capital market integration, in 2025 the Commission adopted under the Savings and Investments 
Union  strategy44  policy  initiatives  that  target  among  others  securitisation,  financial  literacy, 
savings and investment accounts, supplementary pensions, market integration and supervision45. 
Under the next Multiannual Financial Framework, the National and Regional Partnership Plans 
will  support  reforms  that  advance,  among  others,  the  Savings  and  Investment  Union  and 
strengthen the development of market-based funding options. 

Public  investment  remains  on  a  firm  footing  and  EU  tools  have  successfully  mobilised 
investment for the industrial transformation. In 2024 public investment in the EU reached 
3.7% of GDP confirming the positive trend seen in recent years (KPI 19), also supported by the 
Multiannual Financial Framework, including cohesion policy46 and the Recovery and Resilience 
Facility. As of June 2025, InvestEU, the EU’s main tool for attracting public and private sector 
investment, had mobilised almost EUR 300 bn (of which  68.7% from the private sector)47 in 
investments. More than one third of it, EUR 115.5 bn (KPI 21), supports the industrial transition. 
Under the Rearm Europe plan, EUR 800 bn is being unlocked for defence spending, with sizeable 
spillovers  into  investment  and  industrial  production.  From  2028  onwards,  the  European 
Competitiveness  Fund  will  anchor  EU-level  public  investment  in  Europe’s  industrial 
transformation, mobilise private capital at scale, and create a seamless pipeline from Horizon 
Europe–funded research to industrial deployment. 

Aligning national public investment with EU industrial policy priorities is key to making 
the  most  of  synergies  and  achieving  impact.  The  new  Clean  Industrial  Deal  State  Aid 
Framework, consistently with EU industrial policy priorities, simplifies the process to grant aid 
to  accelerate  investments  in  renewables,  industrial  decarbonisation,  clean  tech  manufacturing 
and  de-risk  private  investments.  This  will  help  align  funding.  As  for  Important  Projects  of 
Common European Interest (IPCEIs), there are already 11 approved IPCEIs48 (of which four for 
hydrogen  and  two  for  batteries)  and  eight  IPCEI  candidates  in  the  design  phase49.  The  new 

40 AMECO database. 
41 See: “2025 – List of indicators to monitor progress towards the capital markets union objectives”, EC, DG FISMA, 5 September 2025. 
42 See: “European Financial Stability and integration Review”, EC, DG FISMA 2025. 
43 https://www.ecb.europa.eu/press/key/date/2024/html/ecb.sp241122~fb84170883.en.html 
44 Savings and investments union - Finance - European Commission. 
45 Based on existing estimates in the literature and simplifying assumptions, the package on market integration and supervision alone could add 
EUR 1.3 to 3.6 trillion to GDP over the next 30 years. The benefits of having integrated capital markets in the EU are estimated to be significantly 
higher. See the impact assessment of the Market Infrastructure Package SWD(2025)643. 
46 Cohesion policy represents almost 13% of total government investment in the EU as a whole and 51% in less developed Member States, and 
encourages significant private investments. See Ninth Cohesion Report on economic, social and territorial cohesion. 
47 InvestEU - Performance - European Commission. 
48 See https://competition-policy.ec.europa.eu/state-aid/ipcei/approved-ipceis_en. They enable a total investment of EUR 104.4 bn based on aid 
of EUR 37.6 bn. 
49 Advanced Semiconductor Technologies, Artificial Intelligence, Circular Advanced Materials for Clean Technologies, Compute Infrastructure 
Continuum, Innovative Nuclear Technologies, Biobased Chemicals, Biobased Materials, Biotechnologies for Food and Feed. See Joint European 
Forum for IPCEI - Competition Policy - European Commission. 

9 

 
 
Competitiveness  Coordination  Tool50  is  being  tested  through  two  ongoing  pilots  on  AI 
Gigafactories and on charging infrastructure for e-trucks. Under the next Multiannual Financial 
Framework,  the  National  and  Regional  Partnership  Plans  will  be  able  to  support  IPCEIs  and 
contribute to strengthening the Union’s industrial base, in line with EU priorities and country-
specific challenges. 

Electricity prices remain too high in the EU. In the first semester of 2025, electricity prices 
for large industrial users were 0.16 EUR/KWh (KPI 22), which is lower than at the peak in 2023. 
However, electricity prices for business in the EU remain very high in international comparison, 
more than twice as high as in the US, as higher natural gas prices impact electricity wholesale 
markets.  Energy  intensive  industries  are  particularly  affected  by  high  electricity  and  energy 
prices. 

Electrification has stagnated over the last ten years. Electricity meets just 22.9% of the EU’s 
total final energy consumption (KPI 23)51. High electricity taxes coupled with lengthy permitting 
and  insufficient  build-out  of  grids  have  a  negative  impact  on  electrification  projects  and  the 
electrification of industrial processes and transport. 

The ongoing switch to clean energy is accelerating and the EU is broadly on track to reach 
its climate targets. The roll-out of clean energy sources is expected to significantly reduce the 
costs of importing fossil fuels, improving the EU’s resilience and industrial competitiveness in 
the medium term. Greenhouse gas emissions fell by 2.5% in 2024 compared with 2023, and now 
stand at 37.2% below 1990 levels, while the EU economy is 71% larger than it was in 1990. The 
EU is on track to meet its 2030 target of 55%  emission reduction compared with 1990, if all 
Member States deliver on the measures agreed at EU level and those set out in their National 
Energy and Climate Plans. The shift to renewables is estimated to reduce fossil fuel imports by 
EUR 2.8 trillion between 2031 and 2050, compared with the 2011-2020 average52. Renewable 
energy generation has been growing remarkably: in 2024 it accounted for 25.2% of total energy 
consumption (KPI 24). The annual increase in the capacity to generate renewable electricity has 
been  accelerating.  In  2024  68  GW  of  renewable  capacity  was  added,  more  than  double  the 
amounted added in 2020 (KPI 25) but still below the annual objective53.  

Circularity is progressing slowly due to diverging rules in the Single Market. As mentioned 
in section 1, the share of recycled material injected back into the economy as a proportion of the 
overall use of materials increased very slowly, from 11.8% in 2023 to 12.2% in 2024 (KPI 8). 
This  is  well below the  EU target  of 24% in  2030 and  not  sufficient  to reduce the demand of 
primary  materials  and  related  dependencies  on  third  countries.  For  instance,  today,  although 
almost 38% of electrical and electronic waste is collected in the EU, less than 1% of rare earth 
elements are recycled54. Diverging national rules or schemes on waste and recycled materials55, 
combined  with  lower  prices  for  virgin  feedstock,  hinder  the  development  of  markets  for 
secondary materials. Furthermore, strategic raw materials like metal scrap or black mass remain 
unused.  For  some  materials,  such  as  aluminium  and  copper,  high-grade  wrought  scrap  is 
exported to foreign markets56, which may undermine investment in domestic refining capacity. 

50 Competitiveness Compass for the EU, COM(2025)30 final. 
51 Eurostat. 
52 See COM(2025)484 final. Furthermore, energy efficiency can reduce fossil fuel import bills by around 25%. 
53 See also: Assessment of progress towards the Energy Union and Climate Action objectives (SWD) - Energy. 
54 Eurostat (Waste statistics - electrical and electronic equipment - Statistics Explained - Eurostat). 
55 COM(2025) 500 final. 
56 COM(2025) 125 final. 

10 

 
 
SECTION 4 – Increasing security and reducing dependencies 

Sweeping  changes  in  the  global  trade  landscape  expose  the  vulnerabilities  and  strategic 
dependencies in Europe’s supply chains. The EU has a strong position in international trade, 
but is increasingly coming under pressure, in particular in manufacturing. This is fuelled by third 
country overcapacities, weak domestic demand in certain third countries and the depreciation of 
important international currencies. The strengthening of  EU supply chains is progressing, but 
strategic dependencies remain stubbornly elevated and at increasing risk of being weaponised.    

KPI 26: Trade with the rest of 
the world as a share of GDP   

The EU’s degree of economic integration with 
the rest of the world.   

13.9 % for goods (2024)  
14.7% for goods (2023)  

KPI 27: Exports of goods and 
services as a share of 
worldwide imports    

KPI 28: Domestic clean tech 
manufacturing capacity 

KPI 29: EXVI External 
Vulnerability Index 

The EU economy’s market share.   

8.1% for services (2024) 
7.8% for services (2023)  
12.6% for goods (2024)  
11.9% for goods (2023)  

Share of clean tech components tracked in the 
Net-Zero Industry Act that meet the domestic 
manufacturing benchmark. Target = 100%. 
External vulnerabilities for strategically 
important industrial products57. On a scale from 
0 to 1, higher value: greater vulnerability. 

25.0% for services (2024)  
25.4% for services (2023)   
6 out of 27 (22%) technology 
components exceed the 
benchmark rate (2024) 
0.20 (2023) 
0.19 (2022)  

A reconfiguration of global trade flows is underway. In 2021-2024, EU trade with countries 
outside EU free trade agreements dropped by 2.3 percentage points, compensated for by sourcing 
within  the  EU  increasing  by  1.3  percentage  points  and  trade  with  EU  free-trade-agreement 
partners, both near and far, increasing by 1 percentage point58. Global trade flows show similar 
patterns with re-allocation according to geopolitical blocks59.  

After a long period of growing trade integration with the rest of the world there are now 
signals pointing to a slow-down or even a reversal of this trend. EU trade in goods with the 
rest of the world (average of imports and exports as a share of GDP) continues to decline for the 
second year in a row, corresponding to 13.9% of GDP60 in 2024. While it can to some degree be 
attributed to energy price fluctuations, it also shows the trend of a deteriorating global trading 
climate. EU trade integration in services with the rest of the world has also slowed but remains 
on an increasing trajectory, reaching 8.1% of GDP in 202461 (KPI 26).  

The EU’s share of global trade remains stable, but pressure on manufacturing industry is 
building  up.  The  most  striking  shift  in  trade  dynamics  over  the  past  25  years  is  that  the 
previously  EU-US  centric  landscape  has  shifted  to  a  tri-polar  one  (see  Figure  1  and  2).  EU 
exports of goods account for 12.6% of global imports, slightly above the levels of 10 years ago, 
showing remarkable resilience. The EU’s trade balance in goods has swung back into surplus 
territory, after a drop related to energy price volatility. However, EU industry is coming under 
mounting pressure from global competition fuelled by overcapacities in certain third countries, 
in  many  cases  supported  by  state  subsidies62,  as  well  as  from  third  country  tariffs.  This  is 

57 KPI 29 assesses the combined vulnerability to external shocks of the product categories within the scope of the Clean Industrial Deal. These 
broadly include semiconductors, net-zero technologies, raw materials, basic metals, chemicals, machinery and motor vehicles. 
58 R. Arjona, W. Connell, C. Herghelegiu (2024): “Supply Chain Tectonics: Empirics on how the EU is plotting its path through global trade 
fragmentation”, European Commission, Single Market Economics Papers. 
59 World Trade Organisation, World Trade Report 2023. 
60 Eurostat. 
61 Eurostat. 
62 For example in the area of steel and battery-electric vehicles. 

11 

 
   
 
 
 
 
particularly  the  case  for  energy  intensive  industries,  where  the EU trade  balance  has  steadily 
declined63. The depreciation of important international currencies over the past year adds further 
competitive pressure. For exports of services, the outlook is more encouraging, despite a small 
decline over the last year, with the past five years having seen the EU’s market share grow to 
reach 25% of global trade in services (KPI 27). The Industrial Accelerator Act will create lead 
markets for manufacturing in Europe to foster the EU resilience and safeguard quality jobs. 

Figure  1: Top  30  trading  countries  in  2000 
and  the  weight  of  trade  flows  in  goods 
between them. 

Figure  2: Top  30  trading  countries  in  2023 
and  the  weight  of  trade  flows  in  goods 
between them. 

Source:  European  Commission  services  (DG  GROW  Chief  Economist  Team)  calculations  based  on  the  CEPII-BACI 
database (2023) 

Europe’s share of global incoming foreign direct investment (FDI) has dropped sharply. 
The EU is a welcoming and predictable location for foreign investment and a traditional haven 
for  FDI  with  the  world’s  second  largest  stocks.  Nevertheless,  the  EU’s  share  of  world  FDI 
inflows has receded sharply to 14%, from its peak at 27% seven years ago, against a backdrop 
of  a  weaker  economic  outlook  and  heightened  economic  uncertainty  in  past  years64.  FDI 
generally enables improved competitiveness, technology transfer and the creation of local value. 
At the same time, there have been noticeable examples of FDI failing to generate these benefits 
and posing risks to the EU’s economic security.  

The EU is deepening partnerships across the globe to diversify and reduce dependencies, 
both in imports and exports. This will also increase prosperity and supply chain resilience. 
Work is ongoing to conclude broad free trade agreements and targeted partnerships in areas such 
as raw materials, to the benefit of both the EU and its partners. Similarly, mutual recognition 
agreements should be concluded with EU competitiveness in mind, in ways that improve market 
access and reduce paperwork for European industry while preventing the emergence of loopholes 

63 OECD Working Papers, A comprehensive overview of the Energy Intensive Industries ecosystem, 2025/09. 
64 OECD, FDI flows & FDI stocks. See FDI trends over time in the Single Market and Competitiveness Scoreboard’s FDI indicators. 

12 

 
 
 
 
that fuel unfair global competition65. The EU is also accelerating the economic integration of 
enlargement countries prior to their accession, including through “Single Market Highways”66.  

Europe’s supply chains continue to show significant external dependencies, with increasing 
risk and evidence of these being weaponised. Among products in sensitive ecosystems where 
the  EU  is  heavily  dependent  on  a  single  supplier  country,  more  than  half  of  the  EU’s 
dependencies originate from China67. The EU’s overall dependence on imports of strategically 
important  raw  materials,  components  and  industrial  products  remains  largely  unchanged,  as 
measured by the EXVI indicator68 (KPI 29), with the EU being significantly more exposed to 
external  vulnerabilities  than  China,  although  less  exposed  than  the  US69.  Export  restrictions 
imposed  by  China  have  put  these  dependencies  in  the  spotlight,  in  particular  for  critical  raw 
materials. Dependencies in the space and defence sector as well as for critical medicines deserve 
particular attention70.  

Europe’s main trading partners are increasingly pursuing measures to foster the resilience 
of their supply chains. Annex 3 to this Report provides an overview of resilience measures by 
selected global players. It shows a global trend to make more active use of industrial and trade 
policies to strengthen the resilience of supply chains. The actions include public procurement 
policies and FDI conditionalities, with focus on key strategic sectors and preferential domestic 
access. 

The EU’s efforts to strengthen its manufacturing capacity in key industrial products are 
starting to bear fruit. The first sets of strategic projects under the Net-Zero Industry Act71 and 
the Critical Raw Materials Act72 have been selected. Looking at products within the scope of the 
Net-Zero Industry Act, EU manufacturing currently surpasses the benchmark of meeting 40% of 
EU consumption by domestic manufacturing in six of 27 technology areas. However, for the vast 
majority of monitored key components in battery technologies, electrolysers, hydrogen and solar, 
EU manufacturing capacity still significantly trails the benchmark73 (KPI 28). Completing these 
measures  and  re-creating  a  level-playing  field  for  our  businesses  is  the  aim  of  the  Industrial 
Accelerator Act.  

Conclusion and way forward 
The Single Market is the shock absorber and resilience driver needed in uncertain times. 
It is the foundation of Europe’s prosperity, competitiveness, and industry. Removing remaining 
barriers within the Single Market could lift Europe’s GDP by several percentage. 

Nevertheless, persistent challenges remain, and new ones arise amid geopolitical tensions, 
putting increasing pressure on Europe’s competitiveness. Barriers and fragmentation in the 

65 Commission Staff Working Paper: Priorities for Bilateral/Regional trade related activities in the field of Mutual Recognition Agreements for 
industrial products and related technical dialogue, Brussels, 25 August 2004, SEC(2004)1072. 
66 The Single Market Highways will integrate the business communities of the Western Balkans, Ukraine and Moldova into the EU Single 
Market by accelerating regulatory alignment, building industrial alliances and strengthening value chains. 
67 European Commission Chief Economist, based on Eurostat data and FIGARO tables (2023). 
68 William Connell García, Victor Ho, EXternal Vulnerability Index (EXVI), Single Market Economics Briefs.  
69 China finds itself in the least dependent position with a score in the EXternal Vulnerability Index of 0.12, with the EU at 0.20 and the US at 
0.28 (see KPI 29). 
70 Critical Medicines Act - Public Health - European Commission. 
71 Strategic projects under the Net-Zero Industry Act. 
72 Strategic projects under the Critical Raw Materials Act.  
73 European Commission, DG GROW. For more information about domestic manufacturing of key net-zero technologies, consult the section on 
Global trade & economic security in the Single Market and Competitiveness Scoreboard. 

13 

 
 
 
Single Market persist. Administrative burdens are too high. Energy prices remain persistently 
high and weigh on industry. Innovative entrepreneurs continue to lack access to finance at scale. 
Foreign overcapacities and third-country state subsidies are increasing and tilt the global playing 
field against Europe, while strategic dependencies are being weaponised. 

Against this backdrop, it is urgent to mark a turning point and fully exploit the potential 
of the Single Market. If we want a strong, independent and prosperous Europe, we need to take 
a decisive commitment to complete the Single Market and implement the policy actions adopted 
by the Commission. Annex 2 provides a detailed overview tracking the implementation of the 
Competitiveness Compass, the Clean Industrial Deal and the Single Market Strategy. Bold action 
at national and European level  is needed to complete the Single Market, close the innovation 
gap, foster investments and decarbonisation and strengthen the resilience of supply chains.  

A new impetus is underway to remove barriers in the Single Market at both national and 
European  level  and  to  reduce  administrative  burdens.  The  Single  Market  Strategy  has 
identified the ‘Terrible Ten’ as the most significant barriers for businesses, workers and citizens 
in  the  Single  Market,  to  be  addressed  as  a  top  priority.  These  barriers  originate  at  both  the 
European and national level and therefore require bold action at both levels. The Commission is 
working with Member States to unpack and address the most pressing barriers at the national 
level. The first annual Single Market Enforcement Agenda lines out the enforcement priorities 
for  2026.  At  the  European  level,  the  upcoming  Product  Act,  Construction  Services  Act  and 
Delivery Act will enhance the functioning of the Single Market. The Public  Procurement Act 
will simplify and accelerate procedures, ensuring best use of the 15% of GDP spent via public 
procurement.  The  Commission  has  already  brought  forward  simplification  proposals,  ten 
omnibus packages and additional initiatives expected to cut annual administrative burdens by 
EUR  15  bn;  more  will  come  in  2026.  Under  the  next  Multiannual  Financial  Framework,  the 
National and Regional Partnership Plans will include relevant reforms to further remove barriers, 
notably by improving the efficiency and digitalisation of public procedures. 

This work on barriers, fragmentation and administrative burden needs to be accompanied 
by renewed ambition. We need to complete the Single Market in those sectors that were left 
aside by Jacques Delors 35 years ago and still operate along national lines. Key measures are 
needed to set uniform rules for a predictable environment with scale for citizens and businesses 
alike  in  telecoms,  energy,  services,  capital,  company  law,  research  and  innovation.  Creating 
political ownership and commitment to this endeavour will be the purpose of the Single Market 
Roadmap. 

The Commission is putting forward measures to close the innovation gap. The 28th regime 
(EU Inc.) will provide a single set of rules for companies to set up, operate and grow throughout 
the EU, creating fertile ground for start-ups, scale-ups and European unicorns. The European 
Innovation Act will expedite the market journey for innovations across sectors, while the multi-
billion  Scaleup  Europe  Fund  will  partner  with  private  investors  to  aid  company  growth.  The 
European Research Area Act will seek to remove barriers to knowledge sharing and promote the 
5th  freedom.  The  Digital  Networks  Act  will  reduce  fragmentation  in  the  Single  Market.  The 
Cybersecurity Act, the Quantum Act and the Cloud and AI Development Act will strengthen the 
sovereignty and security of European technologies and infrastructures. The implementation of 
the Union of Skills aims to build skills for quality jobs. 

14 

 
Targeted industrial policies are setting the stage for the re-industrialisation of Europe. The 
Industrial Accelerator Act will boost economic security and industrial capacities in key strategic 
sectors. The Battery Booster mobilises EUR 1.8 bn to strengthen battery manufacturing and the 
automotive  industry  in  Europe.  Besides  these  initiatives,  the  accelerated  build-out  of  clean 
energy  will  pave  the  way  for  lower  energy  costs.  Effective  follow  up  on  the  Commission’s 
recommendations  and  legislative  proposals  under  the  Savings  and  Investments  Union  will 
support EU businesses in accessing investment capital. 

The Commission is actively addressing vulnerabilities and strengthening the resilience of 
supply chains. The RESourceEU Action Plan tackles Europe’s overdependence on third country 
suppliers of critical raw materials. It also accelerates EU-relevant projects with the potential to 
reduce dependencies by up to 50% by 2029, mobilising up to EUR 3 bn in 2026 to this end. 
Furthermore, the Commission will work to facilitate a steady supply of critical raw materials to 
EU industries through rapidly deploying the instruments at its disposal (e.g. the Anti-Coercion 
Instrument) in cases when a third country restricts the supplies of critical raw materials to the 
EU, conditioning access to the Single Market. The EU is putting in place frameworks to ensure 
that  FDI  creates  European  value  added.  The  Commission  will  propose  targeted  measures  to 
ensure  availability  of  aluminium  scrap  and,  if  necessary,  additional  measures  to  ensure 
availability  of  other  metal  scrap  and  black  mass  to  strengthen  strategic  capacities.  Efforts  to 
advance  on  further  free  trade  agreements  will  diversify  supply  chains  and  create  new 
opportunities for businesses.  

Mastering today’s challenging environment requires prompt, joint and coordinated action 
at  the  European  and  national  level.  The  2026  Annual  Single  Market  and  Competitiveness 
Report will act as a foundation for policy debates with the Council, the European Parliament, 
Member States and the business community. 

15